Nowadays, one of the most common problems in sales is where the manager's focus lies. Most of the time, it's focused on closed sales, which is an easy metric to measure but very difficult to control. After all, you can't force a customer to buy.
According to the Harvard Business Review, it makes more sense for sales managers to focus on measuring tasks that can be controlled, such as: customer visits, product demonstrations, website sign-ups, meetings with executives, etc. Based on the impact of these activities on the progression of opportunities through the sales funnel, the manager can guide and assist the salesperson so that a greater number of opportunities are successful.
Some scholars argue that sales metrics can be divided into 3 categories, according to our ability to directly influence them. These are:
Business ResultsThese are metrics linked to the final outcome of sales efforts, over which we have no control. Examples include: total revenue, revenue growth, gross profit, customer satisfaction level, and market share.
Sales ObjectivesIntermediate metrics, where we cannot act directly, but it is possible to influence them through the execution of activities. In other words, an improvement here leads to better results. Examples: Share of wallet, number of new customers acquired, customer retention rate, percentage of target customers contacted;
Sales Activities: fully manageable metrics that are linked to actions performed by salespeople. Example: number of visits made per salesperson, percentage of account planning completed, number of accounts assigned per salesperson, money spent on training per salesperson.
In other words, a proper sales strategy should tell us what Business Results we want to achieve. To make it easier to understand, let's use an example:
We want to increase our company's revenue by 50%. With this clear, we can then set a Sales Objective of acquiring 100 new clients. To achieve this, we will need to plan the necessary Sales Activities to make 500 initial visits to companies that are not yet clients.
Of course, this is a very simplified example, but the goal is to show that if we try to do only "management by results," we can fall into the error of simply communicating to managers that we now need to increase revenue by 50%. They could tell the salespeople that the target has also increased by 50%, and wish them good luck. The problem is that nobody has control over these results. However, this changes when we talk about the 500 visits that the sales team has to make. Which, in this situation, weren't even considered. Do you understand the change?
The impact of CRM on Sales Management
If we can only manage the activities we perform, it's essential that they are stimulated, recorded, categorized, and analyzed. Their relationship to leads and opportunities, and to progression through the sales funnel, must be clear and well-documented. Furthermore, managers need to be aware of all this information and be able to analyze it to make decisions about each activity. For this to be feasible, the use of a CRM system is fundamental.
It is very important that this system facilitates the execution of certain activities and techniques that lead to improved sales team performance, such as:
Incentive Management that, instead of simply rewarding based on results (which cannot be controlled by the salesperson), allows for the creation of compensation plans that incorporate metrics over which the employee has control, which will truly motivate them to achieve better results;
Gamificationwhich can leverage the competitive spirit of salespeople and foster healthy competition among them, with rules geared towards sales actions over which they have control and which lead to results;
CoachingIn order to allow managers to identify which behaviors of certain salespeople have yielded the best results and, based on this, conduct training with the rest of the team, seeking to motivate them.
It is very important for managers to find the metrics that they are truly capable of managing and that will lead them to the desired results, and then focus on them, providing support and guidance to their team.
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*Content inspired by text from the Oracle Brazil blog.
